The offer by Rupert Murdoch's News Corp. for Dow Jones may come to naught, but it has triggered another insider trading case against foreign purchasers. The SEC filed a complaint (here) in the U.S. District Court for the Southern District of New York against Kan King Wong and Charlotte Ka On Wang Leung, a husband and wife, for their purchase of 415,000 shares of Dow Jones from April 13 through April 30 in an account at Merrill Lynch. After the announcement, the value of the shares increased by over $8 million. Trading in Dow Jones garnered significant attention after News Corp.'s announcement (see earlier post here), but it was in the out-of-the-money call options that the real profits occurred. The trading here shows that buying stock is not as cost effective as buying options because the defendants had to commit over $15 million to the trades, a far higher amount than would be necessary to buy call options for a comparable amount of shares -- not that I'm advocating any trading on material non-public information, of course. The SEC's complaint does not connect the defendants to any identified source of information, but it does note that one of the defendants put in a sell order and inquired when the money would be available. The Commission needed to act quickly to keep the money in the United States, and the District Court entered a freeze order (here) to ensure that the proceeds do not disappear. As always, the challenge now is to link the defendants to the information. And look for the SEC to move on the options trading at some point. (ph)